Measuring environmental efficiency and technology inequality of China's power sector: methodological comparisons among data envelopment analysis, free disposable hull, and super free disposable hull models.

ABSTRACT

China's power sector has received great research attention because of its large energy consumption and CO2 emissions. This study assesses the environmental efficiency and technology inequality of China's power sector from 2008 to 2017. Methodologically, this study proposes a non-radial FDH (free disposable hull) model and a super non-radial FDH model. The non-radial FDH model relaxes the convex assumption and captures all inefficiencies of inputs, desirable output and undesirable output. The super non-radial model is capable of discriminating efficient power sectors and always has feasible solutions. We also compare their performance with the non-radial data envelopment analysis (DEA) model. The main conclusions are summarized as follows First, the environmental efficiency of China's power sector has experienced steady growth; the power sectors in the east region outperform those in other regions. Second, the proposed FDH models are more applicable and reliable than the non-radial DEA model in efficiency measurement of China's power sector, due to the indivisibility of labor. Third, there has been growing technology inequality and the main driving factor determining technology inequality is the inter-region efficiency Gini coefficient. To improve environmental efficiency and eliminate technology inequality, the government should mainly solve the issue of excessive labor input and establish a free technology market for technology trading.